Corporate tax inversion revisited
Whether US companies are admitting it or not, as long as they place their priorities on satisfying their shareholders, they will continue to look in all corners either make more money or save more money. This is the reality. As a result, more and more companies have at least attempted to do this by trying to acquire foreign companies, followed by moving their headquarters to the foreign country, often a company in the UK, which happens to have a lower corporate tax rate. This process is called corporate tax “inversion”. Since our blog posting in late April of this year, the attempted inversion by Pfizer to buy AstraZeneca as been rejected, but other large US companies are attempting to do the same thing, such as AbbVie’s attempt to buy the Irish company Spire, and Walgreen’s attempt to buy the Swiss company Alliance Boots.
If too many companies are successful with inversion, it will likely exacerbate the public debt problem in the US, while spreading the tax burden to fewer players. The only realistic solution is to lower the corporate tax rate ASAP, as the UK did a few years ago, before the problem gets worse.